CAC CAC Construction Law and Ethics 2 — Questions and Answers
Question 1: What is bid shopping in construction, and why is it considered unethical?
- Using a low subcontractor bid to win a job then leveraging it to force lower bids after award, which undermines fair competition (Correct answer)
- Comparing multiple architect proposals before hiring
- Seeking better material prices during procurement
- Reviewing alternative design bids from several engineers
Correct answer: Using a low subcontractor bid to win a job then leveraging it to force lower bids after award, which undermines fair competition
Bid shopping involves using a subcontractor's bid to pressure others into undercutting it post-award, violating trust and fair competition principles.
Question 2: What is the ethical obligation of a contractor who discovers a significant design error during construction?
- Promptly notify the owner and architect in writing before proceeding with affected work (Correct answer)
- Correct the error and bill for the extra work without notice
- Continue work as drawn to avoid delay
- Obtain a separate design contract to fix it
Correct answer: Promptly notify the owner and architect in writing before proceeding with affected work
Contractors have an ethical and contractual duty to promptly notify the design team of discovered errors so the project team can respond before the issue is built in.
Question 3: Conflicts of interest in construction most commonly arise when:
- A party has a personal or financial stake in a decision that could compromise their professional judgment (Correct answer)
- Two contractors submit identical bids
- A subcontractor works on multiple projects simultaneously
- An inspector approves work they did not observe
Correct answer: A party has a personal or financial stake in a decision that could compromise their professional judgment
A conflict of interest occurs when personal gain or relationships could improperly influence a professional's decisions or recommendations.
Question 4: What does the term 'differing site conditions' (DSC) mean in US construction contracts?
- Subsurface or concealed physical conditions materially different from those indicated in the contract documents (Correct answer)
- Weather conditions that delay the project
- Labor shortages at the job site
- Owner-requested changes to the site layout
Correct answer: Subsurface or concealed physical conditions materially different from those indicated in the contract documents
A Differing Site Condition clause allows contractors to claim equitable adjustment when actual subsurface conditions differ materially from what the contract documents indicated.
Question 5: Professional licensing for contractors in the US is governed by:
- Individual state licensing boards with varying requirements by state (Correct answer)
- A single federal licensing body
- The American Institute of Architects
- The Associated General Contractors national office
Correct answer: Individual state licensing boards with varying requirements by state
Contractor licensing is a state-by-state matter; requirements, classifications, and examinations vary significantly across the 50 states.
Question 6: Anti-kickback laws in federal construction primarily prohibit:
- Paying or receiving money to improperly influence contract awards or subcontract selections (Correct answer)
- Using non-union labor on federal projects
- Subcontracting more than 50% of a federal contract
- Bidding on multiple federal projects simultaneously
Correct answer: Paying or receiving money to improperly influence contract awards or subcontract selections
The Copeland Anti-Kickback Act prohibits contractors from requiring employees or subcontractors to kick back any part of their compensation as a condition of employment.
CAC CAC Construction Law and Ethics 2
What is bid shopping in construction, and why is it considered unethical?